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Grab, Uber each fined $6.5m after probe uncovers anti-competitive behaviour

Uber and Grab have both been fined S$6.5m after an investigation by the competition regulator in Singapore found a deal struck between the two companies was anti-competitive.

Hollow promise: Grab and Uber said they were “coming together to serve you better”. They have now both been fined for anti-competitive behaviour

The probe by the Competition and Consumer Commission Singapore concluded that the sale of Uber’s Southeast Asia business to Grab in exchange for a 27.5% stake in its rival adversely effected consumers and drivers.

Neither party notified the CCCS for clearance of the March deal.

When the deal was completed, the firms said they were “coming together to serve you better”.

The investigation found that Uber would not have exited Singapore had the deal not taken place. As a result of it leaving the market, fares and commission paid by riders and drivers increased, with a decrease in the amount and frequency of rider promotions and driver incentives.

The CCCS said Grab announced changes to its Grab Rewards scheme four months after the deal which “generally reduced the number of points earned by riders per dollar spent on Grab’s trips and increased the number of points required for redemption”.

“Indeed, CCCS has found that fares have increased between 10% and 15% post-Transaction,” it added.

It also found that new entrants into the market found it difficult to scale given that Grab, which holds an 80% market share in Singapore, had slapped exclusivity conditions on taxi firms, car rental companies and drivers.

“Grab’s exclusivities hamper the ability of potential competitors to access drivers and vehicles that are necessary for expansion in the market,” the regulator said.

Along with the $6.582m fine for Uber and $6.419m for Grab, the firms were ordered to take steps to open up the market.

Measures include the termination of exclusivity requirements on drivers and taxi firms, and the continuation of Grab’s pre-merger pricing algorithm and driver commission rates.

Uber has also been instructed to sell Lion City Rentals vehicles to a competitor – but not to Grab with approval of the CCCS.

The CCCS said this will protect riders’ against excessive price surges.

“Mergers that substantially lessen competition are prohibited and CCCS has taken action against the Grab-Uber merger because it removed Grab’s closest rival, to the detriment of Singapore drivers and riders,” CCCS chief executive Toh Han Li said.

“Companies can continue to innovate in this market, through means other than anti-competitive mergers.”

The CCCS said it was “practically impossible” to unravel the transaction and noted that during the investigation it became the clear the “parties had provided for a mechanism to apportion competition law penalties”.

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